Strategic Management: Impact of Internal and External Environment on Organizational Strategy

This report analyzes the impact of internal and external environmental variation on organizational strategy, using Unilever as a base company. It also describes the process used by organizations to determine their strategy and the importance of strategic management.

BSc (Hons) Business Management Top up
BMP6002 Strategic Management
Strategic Planning
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Table of Contents
Introduction .......................................................................................................................3
Describe strategic management ........................................................................................3
Assess the impact of internal and external environmental variation on organizational
strategy..................................................................................................................................5
Conclusion .................................................................................................................................8
References .................................................................................................................................9
Appendix: The Business Plan....................................................................................................10
A review of an organization's strategic plan ......................................................................10
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Introduction
Strategic management is defined as process of offering overall direction
through creating suitable plan and policies in order to accomplish desired objectives
and utilising resources to implement the plan. It allows business organisation to gain
competitive advantage in the marketplace and enhance their overall performance
effectively (Etemadian and Parhizgar, 2021). Proper strategic management helps
business organisation to offer overall direction and specifying the objectives. For this
report Unilever is taken as base company. Unilever is one of the well established
British consumer goods company. It was founded in 1929, offering products in more
than 190 countries and owing around 400 brands. This report highlights the detailed
description of strategic management along with the process used by the business
organisation to assess their strategy. In addition to this the internal and external
environment variation on business strategy is also highlighted in this report.
Furthermore, proper strategic plan on the basis of change in internal and external
environment is also highlighted in this report.
Describe strategic management
Strategic management is defined as the process properly utilising the
resources of the organisation leading to effectively achieve desired goals and
objectives of the company. It is also setting goals, determining competitive
environment, determining the internal business, analysing strategies as well as
ensuring that the required strategies are implemented across the organisation. It is
an continuous process of planning, monitoring, determining and evaluating all the
requirement of an business needs to accomplish its desired goals and objectives
(Farrukh, Shahzad and Raza, 2021). It is basically revolves around an business
proper understanding of its mission and vision for where they wants to reach in the
future, values that will help them to reach its goals. It requires proper planning, ability
of an business to set both short term and long term objectives.
Strategic planning refers to planning of required strategic decisions , task and
resource utilisation to achieve desired goals and objectives. Generally, the strategic
management is classified into various schools of thoughts such as a prescriptive
approach to strategic management describes how strategies needed to be
developed in an organisation. Whereas a descriptive approach describes how
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strategies developed needed to be put into action. In context to Unilever, which
generally operates in an highly competitive environment. Initially in 1999, company
started to implement a strategy called 'Path to growth' based on the capital
efficiency, global purchase, operating cost and focus on brand image (Greve, 2021).
The company has effectively focused on their strategy in order to achieve desired
objectives and continue to sustain in the marketplace. At present the strategy of the
company involves building a purpose led, a future fit business and continuously
developing growth culture. The company focus on determining their capacity through
agility and digital transformation, developing employees through continuous learning
and training. The main strategic objective of company is to help around one billion
people improve their health and livelihood. Unilever follows five step in order to
effectively implement their strategy such as strategic analysis, evaluating external
and internal environment, formulation of strategy and finally implementing the
strategy. It allows company to gain competitive advantage in the marketplace and
enhance their overall performance.
Discuss the process used by organizations to determine their strategy
Strategic management is all about detailed determination and description of
business strategy that can be considered in order to gain competitive advantage in
the marketplace and enhance their overall performance. Proper strategic
management helps the business organisation to continue to perform better in the
market place. Strategic management process refers to steps needed to be taken into
consideration by the business organisation in order to achieve desired goals. In
respect to Unilever, company follows a systematic and clear process in order to
determine and implement their strategy as mentioned below:
Defining the mission statement: The first step in the strategic management
process is determining the company's position in respect to the company's mission
statement. In case of Unilever, in order to determine their strategy the company
should determine their mission or objectives and accordingly set their strategy.
Proper understanding of mission will enable company to analyse what type of
strategy needs to be implemented by them (Li and Reuer, 2021).
Analysing environment: Determining various factors present in the
environment helps the company in the proper implementation of strategy. It helps in
collecting and providing information for strategic purpose, handling the factors that
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can effect their strategic implementation. In case of Unilever, the company uses
framework like SWOT and PESTEL analysis in order to determine their internal and
external factors that can impact their strategic decision.
Organisational self assessment: It refers to analysing various forces within
the organisation to understand the nature and degree of competition present inside
and outside the company. Also determining the position of company and availability
of resource in implementation of strategy. In context to Unilever, in order to
determine the competitive level company uses porter's model and to determine the
resources and capabilities company uses vrio model. It helps them to determine the
right strategy (LI, Munna and Nowak, 2021).
Establishing goals and objectives: The goals and objectives of the
company needs to be determined by the organisation effectively. The goals and
objectives needs to be specific, flexible and measurable because of the changing
market environment and external factors. In case of Unilever, manager should
ensure that the goals and objectives set are effective and measurable leading
business towards growth and success.
Formulating strategy: The last stage is the formulation of strategy and
determining its implementation. The organisation needs to ensure that all the steps
of strategic planning are followed and proper strategy is implemented effectively. In
case of Unilever, manager ensures that there clarity of policies and responsibilities
among the employees in order to successfully implement the strategy and gain
competitive advantage in the marketplace.
From the above it is analysed that Unilever, properly follows the strategic
management process in order to effectively determine the strategy and implement it
in the company leading to accomplish desired goals (Rosenbaum-Elliott, 2021).
Assess the impact of internal and external environmental variation on organizational
strategy
Business environment includes all the factors that directly lead to impact the
functioning and profitability of the business. It refers to the marketing terms that
helps in determining the factors and forces that directly affects a organization to
develop and keep successful consumers relationship. In context to Unilever, there
are various internal and external factors that can directly influence the organization
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strategy. In order to determine the internal and external factors of the company
suitable framework are taken into consideration as mentioned below:
SWOT Analysis: It refers to the effective strategic planning or technique used by the
business organization to determine various internal factors present inside the
organization impacting the performance of the company. It helps in determining the
strength and weakness of organization as well as various opportunities and threat
present in the marketplace (Tomo, Mangia and Canonico, 2021). In context to
Unilever, the SWOT analysis is mentioned below:
Strength Weakness
 Unilever is one of the largest and
global company, having more than
400 brands around the globe.
 Company is considered to be the
largest producer of soap around
the globe as well as having over
170000 employees globally.
 There are large number of
substitute products in the
emerging market which is
considered to be biggest
weaknesses of the company
 Limited business diversification in
business beyond the consumer
good markets is another
weakness of the company.
Opportunities Threat
 Expansion of business into new
and emerging market can be great
opportunity for Unilever.
 Growing demand for health
conscious products can be area
that can be explored by Unilever.
 Increasing competition in the
marketplace can be threat for the
company.
 Changing taste and preference of
the consumers can also create
threat for the company.
PESTEL Analysis: It refers to one of the essential strategic framework considered
by the business organization in order to various factors present outside the business
organization but directly leading to impact the profitability and productivity of the
company. In case of Unilever, the PESTEL analysis is mentioned below:
Political factor: It refers to the change in the government policies and rules
that can lead to create unstable environment for the business organization. In case
of Unilever, company operates at the global level, any kind of political stability of
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countries around the globe leads to create opportunity for the company. For
example, political stability of US enables company to reduce barriers in strategic
implementation in the country. But whereas the political issues in European union
and Brexit in UK creates threat for the company in effective operation in consumers
goods market. Company has opportunity for international growth in the basis of
expanding free trade relations (Vyshnevskyi, 2021).
Economic factor: It refers to the change in the interest rate, inflation rate,
employment rate, GDP growth, consumers spending capacity and so on. Company
operating in the developed countries leads to directly impact the profitability and
productivity of the business through enabling customers to spend more on the
buying quality product and services. Also with the UK facing an economic stagnation
can enable the company to invest in the well developed market. This can help
company to enhance their performance and gain competitive advantage in the
marketplace.
Social factor: It includes the consumers attitude, behavior and culture that
directly influence the functioning and profitability of the company. Socio cultural
trends and issues directly affect unilever's overall effectiveness and profitability. With
increasing health consciousness, company can focus on this issue and expand their
products addressing increasing health consciousness. With increasing
environmental issues and concern, the company can also offer sustainable products
leading to attract large number of customers.
Technological factor: It is considered to be one of the most essential factor,
any kind of changes in the technology directly leads to impact the performance and
profitability of the business. The organization should ensure that they are using well
advance technology in order to survive in the marketplace. In context to Unilever, the
company is effectively using well advance technology in order to survive in the
market and attract large number of customers. Company uses online payment
methods making it easy for their customers to carry out their buying process.
Environmental factor: It refers to working towards welfare and sustainability
of the environment. It is the responsibility of each and every organization to work
towards sustainability and welfare of the environment. In case of Unilever, company
is effectively working towards reducing their carbon footprint, also dedicated towards
making their plastic packaging to be reusable. This all help company to gain
competitive advantage in the marketplace.
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Legal factor: It is defined as the legal laws and legislation implemented, and
needed to be followed by each and every organization in order to smoothly and
effectively carry out their activity. In context to chosen company, it has over more
than 400 brands so it becomes essential for the company to follow number of laws
and regulation. Company is also needed to protect their patents and trademarks.
Company effectively follows all the rules and regulation in order to smoothly carry out
their activity and achieve desired goals (Zhao and et.al., 2021).
Conclusion
From the above report, it has been concluded that proper strategic planning
helps business organization to achieve desired goals and objectives as well as gain
competitive advantage in the marketplace. This report helps in analyzing that
strategic management plays an essential role behind the success of the organization
along with the process considered by the organization to determine their strategy.
Also the impact of internal using SWOT analysis and external environment using
PESTEL analysis on the strategy is also analyzed in this report. Also proper
business plan is also analyzed in this report.
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References
Books & Journals
Etemadian, S. and Parhizgar, M.M., 2021. Designing and explaining the strategic
control model of the customs of the Iran. Journal of Strategic Management
Studies, 12(47).
Farrukh, M., Shahzad, I.A., Meng, F., Wu, Y. and Raza, A., 2021. Three decades of
research in the technology analysis & strategic management: a bibliometrics
analysis. Technology Analysis & Strategic Management, 33(9), pp.989-1005.
Greve, H.R., 2021. The organizational view of strategic management (pp. 43-59).
Oxford University Press: New York, NY.
Kolev, M., 2021. 12 Reverse Stress Testing with Strategic Management Tools. In
Reverse Stress Testing in Banking (pp. 269-290). De Gruyter.
Li, C. and Reuer, J.J., 2021. The impact of corruption on market reactions to
international strategic alliances. Journal of International Business Studies,
pp.1-16.
LI, Z.Q., A Study of Breakthrough Innovation of Strategic Management: from the
Perspective of Risk Investment. Contemporary Finance & Economics, (09),
p.1568.
Munna, A.S., Original Paper Strategic Management, Leadership and Staff
Motivation: Literature Review.
Nowak, R., 2021. Strategic Flexibility And Performance: Effects Of Potential And
Realised Absorptive Capacity. International Journal of Innovation
Management, 25(07), p.2150077.
Rosenbaum-Elliott, R., 2021. Strategic advertising management. Oxford University
Press.
Tomo, A., Mangia, G. and Canonico, P., 2021. Innovating processes and processing
innovation: strategic approach to innovation in accounting firms. Journal of
Economic and Administrative Sciences.
Vyshnevskyi, O.S., 2021. Digital platformization of strategic management of
Ukrainian economy. Economy of Industry, (3 (95)), pp.5-24.
Zhao, J., Xi, X., Wang, S. and Gong, C., 2021. Dynamic analysis of different
resource allocations: Implications for resource orchestration management of
strategic alliances. Computers & Industrial Engineering, 158, p.107393.
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Appendix: The Business Plan
A review of an organization's strategic plan
Business plan is defined as the document prepared by the business
organization outlining the key activities, objectives and determining how organization
is planned to achieve desired goals and objectives of the business. In case of
Unilever, functioning and profitability of the company has been impacted due to the
outbreak of current COVID 19, in order too continue to gain competitive advantage in
the marketplace and enhance their performance the company is planning to
implement new technology in order to enhance their sale and attract large number of
customers. The business plan is mentioned below:
Executive summary: Unilever is one of the leading consumer goods brand around
the globe offering quality services to their consumers. With the outbreak of current
COVID 19 pandemic the profitability of the company has been directly impacted. In
order to continue to grow company is planning to implement new technology like AI
leading to attract large number of customers (Kolev, 2021).
Background: Unilever is one of the well established consumer goods company
offering quality services to their target customers around the globe. It is considered
to be largest producer of soap around globe. It was founded in 1929 owing over 400
brands.
Market analysis: It is defined as the determining the various factors that are present
in the market leading to impact the profitability and productivity of the business. In
case of chosen company, to analyses the market the Ansoff matrix is mentioned
below:
Ansoff matrix: It is refers to one of the strategy used by the business organization in
order to determine the market and suitable strategy that can be considered by them
to gain competitive advantage in the marketplace. In case of chosen company the
four main strategy are mentioned below:
Market Penetration: One of the most essential strategy that can be
considered by the organization in order to grow into the marketplace is the market
penetration strategy. This strategy allows the business organization to offer existing
products into the existing market. It can be done through using advance promotional
techniques and offering various benefits.
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Product development: Another strategy is product development strategy,
this enablers organization to gain competitive advantage through offering new
product into existing market. This can be done through market research determining
the needs of the customers and satisfying them accordingly.
Market development: It refers to kind of strategy which enables company to
gain competitive advantage through entering into new market. This enables
company to expand their market size and enhance their overall performance.
Diversification: The last strategy is diversification, this helps organization to
gain competitive advantage through offering unique products into new market.
From the above it is analyzed that in case of Unilever the company can use
market development strategy. This will allow company to expand their business into
new emerging market leading to enhance their market size and improving their
overall performance.
Objective: The main objective of Unilever is to expand their market size and
continue to remain the market leader. Also increase their sale by 20% in the coming
year.
Monitoring and controlling: In order to continue to perform better and achieve their
desired objectives. Also to effectively implement the strategy it is essential for the
chosen company to effectively monitor and control their strategy. In case of chosen
company, SAF model will be considered in order to monitor and control their activity
as well as evaluate their strategy effectively.
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